About Me

Tuesday, December 12, 2017

Protection of private property rights — including
physical and intellectual — is an important cornerstone of a free society.
People can exclusively use, keep, sell, donate or give away their property if
they want to.

There is a measurement of property rights protection
worldwide being done annually by the Property Rights Alliance (PRA), a
Washington DC-based think tank. It produces the annual International Property
Rights Index report and partners with independent, nongovernment, and
market-oriented think tanks and institutes from many countries. IPRI covers
three major areas: (1) Legal and Political Environment, (2) Physical Property
Rights (PPR), and (3) Intellectual Property Rights (IPR) that include
protection of patents, trademarks and brands, copyrights and trade secrets.

In the IPR of several ASEAN countries, the gap is not
very wide between say, Singapore and the Philippines or Indonesia (see table).

Currently, there are IPR issues that are intertwined with
taxation issues of some “sin products” like tobacco and alcohol.

In the Philippines, the sin tax law of 2012 or RA 10351
is turning five years old next month. The law has dual purposes of (a) reducing
smoking and drinking incidence in the country by raising tobacco and alcohol
taxes, and (b) raising more government revenues.

So far, both have been achieved but there are moves and
legislative bills to further raise tobacco tax to twice or thrice their current
rates.

In December 2012, Australia introduced a variant of this
law aimed to further discourage smoking. Its plain packaging law required
tobacco companies to remove the brand, trademark, and logos of its tobacco
products and replace them with plain packs with graphic warnings.

Since some smokers may be unable to distinguish good
brands from new and/or inferior brands, they are supposedly discouraged from
stop smoking.

While the goal is good — to protect public health — the
means and the policy leaves much to be desired.

Since it is assumed that consumers can no longer
distinguish good brands from inferior ones, brand competition is precluded.

As a result, companies will now be forced to compete on
the basis of prices alone, allowing players with poor but cheap products to
gain advantage and attract more customers.

Which may then defeat the purpose of anti-tobacco
initiatives because this may yet increase the incident of smoking.

Five years after introducing its plain packaging scheme,
has Australia been able to meet its goal?

The Australian government collects data on national
smoking incidence every three years as part of its National Drug Strategy
Household Survey (NDSHS).

Based on 2016 data — its most recent — there has been no
statistically significant decline in the overall daily smoking rate between
2013 (12.8%) and 2016 (12.2%).

So the plain packaging scheme is a failure in Australia.

Moreover, the plain packaging law has unwittingly
succeeded in raising the consumption of illegal tobacco, estimated at 13.9% of
total consumption in 2016. This results in an estimated excise tax loss of
A$1.6 billion for the government last year.

Furthermore, Australia is also facing a dispute
resolution panel at the WTO for implementing the law that disrespects IPR laws
on trademark and branding.

France and the UK have also introduced the plain
packaging scheme in recent years. One unintended result in France is the rise
in illicit tobacco coming from some terrorist groups and criminal syndicates
while the French government suffered an excise tax loss of approximately €2
billion in 2016. This illicit trade was linked to jihadists traveling to Syria
and Iraq and terrorist attacks in France. Counterfeit cigarettes are also among
the most investigated IP-crime in the UK and are linked directly to criminal
organizations.

In Asia, there are plans to introduce plain packaging
legislation in Singapore, Malaysia, Taiwan, Sri Lanka, and Nepal.

I am a non-smoker and have never been a fan of smoking. I
am just a fan of individual liberty and people having the freedom what to do
with their own body and life, also a fan of the rule of law and people’s right
to private property.

The plain packaging scheme is dangerous because (a) it
disrespects private property rights and IPR laws, (b) encourages the production
of illicit items from illicit and possibly criminal players who can easily play
with price competition, (c) it encourages more consumption because very cheap
products with no brands are more easily available, and (d) it reduces
government potential excise tax revenues, which might result in creating new
taxes elsewhere.

I am reposting an article by a friend, Ricardo "Ric" Barcelona, published in the Inquirer last November 27, 2017. I attended the book launching of Ric's book, “Energy
Investment: An Adaptive Approach to Profiting from Uncertainties” last November 22, 2017 at Shangrila Hotel Makati. Good work and congrats again, Ric.---------------

In writing my new book, I came face to face with three
energy investment paradoxes. All trace their roots to generous subsidies.

Counter-intuitively, generous subsidies did not result in
wide scale deployment of renewables, more so with solar as subsidies’ poster
kid.

Innovation is the second paradox. Advocates argue that as
increasing renewables capacity is installed, their costs would fall.

Ironically, when subsidies are too generous, the costs
decline more slowly than in markets without subsidies.

The third paradox blasted the notion that growth and
profitability go hand in hand.

With solar installation’s “frenzied” growth, albeit from
a low base, I struggled to find beneficiaries of this boom that profited
financially, much less achieving value-creating returns.

Perhaps, not surprisingly, we come across contradictory
reports on renewables’ progress from the business press.

One sunny morning in 2013, leading journalists herald the
dawn of renewables’ new era. Solar is sold at a price lower than coal, so the
headline says. As analysts scramble to validate their financial models, most
could only scratch their heads and were at a loss for answers. The next batch
of headlines came to their rescue. Investors and advocates of “competitive”
solar power were up in arms. The cause? Governments in Europe cut renewables’
subsidies drastically. Within weeks, “high growth” solar companies filed for
bankruptcies, with wind struggling to make ends meet while barely remaining
afloat albeit financially moribund.

In The Atlantic’s November 2015 issue, which I quoted
William Gates, Microsoft’s founder, provided an answer as to where the problem
lies.

By succinctly arguing how costs comparisons become a
disservice to the environmental cause, Gates observed: “Photovoltaic solar is
not economical. Its intermittency is a major problem. When environmental
enthusiasts point to photovoltaic solar as having a similar cost to
hydrocarbons, what they mean is that at noon in Arizona that may be the case.
However, solar does not come at night. So the fact that at one moment you reach
parity, so what? Distinguishing a real solution from a false one is actually
very complicated”.

Economics of subsidies

The economic cost of energy equates to their life cycle
cost of energy. This is a simple addition of the recovery of its normalized
fixed assets costs, variable operating expenses, and fuel costs. Embedded
within the fixed costs are its implied return on assets and a depreciation
expense, while variable and fuel costs are inflation adjusted, with fuel prices
accounting for most of the volatilities. Renewables tend to have stable costs.

Philippine coal-fired power’s economic costs would be
about P7.29/kWh, while PV Solar would be about P9.09/kWh. Financial costs based
on acquisition prices would be about P3.00/kWh to P4.50/kWh. This compares with
PV Solar’s feed-in tariff (FiT) of P8.50/kWh. With PV Solar equipment costs
having fallen sharply, its economic cost is below the feed-in tariffs. While
the learning curves effects favor PV Solar’s improved costs competitiveness,
fuel and power prices from coal-fired and gas-fired power fell from peak of
P8.00/kWh to its present levels of P2.00 to P3.00/kWh. The FiT subsidies
actually widened to P5.50 to P6.50/kWh, or up to two thirds of revenues.

The lessons are stark. When subsidies are set as the
costs differences, the “correct” level is indeterminate. As power prices
increase, renewables need lesser subsidies but nevertheless continue to
collect. When this happens, consumers would coax regulators to claw back the
subsidies because renewables are raking it in at consumers’ expense.

Paradox One: Generous subsidies do not result in wide
scale renewables deployment. Highly dependent on subsidies, changing government
priorities that cut subsidies turn secure revenues, into the very source of
uncertainty that bankrupt the venture.

Innovation paradox

Learning curves suggest that with each doubling of
renewables’ capacity, its costs would decline by about 20 percent. Enthusiasts
present this as evidence that success is a fait accompli.

PV Solar exceeded what the theory prescribes. The
learning curves, however, could stall or even reverse its decline. For example,
US wind turbines costs declined from about $4,500/kW in 1997 to $1,200/kW in
2001. When subsidies were made more generous in 2004, the rush to build wind
farms clogged the production lines that saw wind turbine prices spiked to
$2,400/kW in 2010 before settling at $1,500/kW in 2015.

Rapid declines in renewables’ costs impact producers’
revenues, where exponential volume expansion is subdued by accelerated price
declines. In effect, innovations that lead to rapid costs decline may be
curtailed when subsidies buffer the need for aggressive costs competition.

Project proponents act as mechanisms to channel subsidies
from the state to producers. A quick mental calculation would convince
proponents that the cost of postponing investments has its value.

If it becomes certain that tomorrow’s equipment costs
would be substantially lower, and the technological cycle is shortened significantly,
the cost of waiting in terms of foregone revenues could be lower than the
equipment costs savings.

This is where PV Solar’s fate is sealed. Unlike hydro or
geothermal power’s utilization rate of up to 95 percent, PV Solar at best is 22
percent. The foregone revenues are a fifth of those lost from alternative
technologies. Worse, after five years of operation, PV Solar’s utilization
rates could fall to 12 percent to 15 percent. This comparison makes developers
more inclined to wait rather than to rush in to invest—unless of course the
subsidies are generous.

What happened to the early movers—an advantage that
strategy would suggest they reap the benefits for being decisive? Ironically,
as future equipment costs fall farther, the early movers are stuck with
obsolescing assets that are stranded as they lose competitiveness. Worse, their
valor and decisiveness to be the first to invest leaves them to do the heavy
lifting to lower costs that ultimately benefit the latecomers to profit from
their labor.

Simple arithmetic tells us that for as long as revenues
falls lag the rate of costs reductions, firms could expand cash operating
margins. Solar equipment and panel producers are trapped in vicious cycles.

To remain competitive, they continually innovate that
costs money while reducing costs (and prices). Competitors push the technology
frontier that renders obsolete any incumbents’ offerings. As competition
intensifies, rising costs and falling revenues or market shares could only lead
to bankruptcies.

Within the PV Solar waiting game, in bypassing one
generation of technology, and wait the more cost effective innovation, the
shorter waiting period could prove lucrative for developers. However, for PV
Solar producers, the waiting game could only exacerbate the pressure on
operating margins.

Paradox Three: Accelerated volume expansion and rapidly
declining prices erode cash operating margins, where the firm loses more the
more it grows.

In my academic sojourn, what was presented as simple and
readily understood formulation for calculating the “correct” subsidies turns
out to be nuanced and complex. Under dynamic markets, where energy prices vary
daily, fixing the subsidies becomes an indeterminate exercise. There are many
possible answers for a given time that does not hold true once the prices
change.

When PV Solar rely on up to 67 percent of revenues from
subsidies, the state becomes a counter-party that is critical to sustaining the
firm’s financial viability.

Vagaries of politics imply constantly changing
priorities, making for a fickle advocate.

Contrary to popular belief, subsidies are far from a
source of secure income. As governments renege, subsidies (or its loss) become
a major credit risk.

We may take William “Bill” Gates’ advice to heart:
“Distinguishing a real solution from a false one is actually very complicated.”
Understanding how business work, and applying the same rigor to renewables and
our energy supply portfolios may just lead us to offering a real solution to
meeting our future energy needs.

After her rejection by the Commission on Appointments (CA) last May, it was expected that her successor, Sec. Roy Cimatu, would recall or reverse the order. He did not. So the Mining Industry Coordinating Council (MICC) formally recommended the lifting of the ban last October. Then President Duterte himself declared that the ban remains.

This roller-coaster style in policy is captured in recent stories in BusinessWorld, their publication date this year is indicated:

1. “End open-pit mining ban — MICC” (Oct.25)

2. “Miners face longer wait for end to open-pit ban” (Nov. 21)

3. “Better prices push up value of metal production even as volumes drop” (Nov.22)

The last report mitigates the gloom in the industry, that while metallic mineral output in the country from January-September 2017 has declined, world prices of copper, nickel and silver have increased, according to the Mines and Geosciences Bureau (MGB).

MINERAL RENTS
This leads us to the big mining potential of the Philippines compared to its neighbors in North and Southeast Asia. One indicator of such potential is mineral rents, defined by the World Bank as “the difference between the value of production for a stock of minerals at world prices and their total costs of production. Minerals included in the calculation are tin, gold, lead, zinc, iron, copper, nickel, silver, bauxite, and phosphate.”

In 2015 in the ASEAN, only Laos has a higher mineral rents/GDP ratio than the Philippines. Even Indonesia and China, which are abundant in mineral resources, have lower ratio than the Philippines. Many African countries have very high ratio, partly because they have high output and partly because they have a low denominator, GDP size (see table).

Russia’s ratio that year was 0.9, Canada 0.5%, US 0.1%. World average was 0.4%, all lower than the Philippines. Australia indeed is a good model in developing the industry with high ratio despite its huge denominator.

MANICANI ISLAND MINING DEBATE
Among the recent high profile debates in the industry is the renewal of the Mining Production Sharing Agreement (MPSA) of Hinatuan Mining Corp. (HMC) in Manicani Island, municipality of Guiuan, province of Eastern Samar. The current MPSA (1992-2017) will expire this year and hence, a renewal is applied by the company.

Some facts and numbers here which I got from a friend, BS Geology student in UP Diliman, Ralph Abainza, who went to Manicani last Nov. 14-15.

• MPSA covers 420 hectares or 36% of Manicani Island’s total land area of 1,165 hectares but actual mine area is less than 3% of total land area, the other 33% are roads, community projects like school buildings, housing, offices and equipment area, etc.

• Of the 25 years MPSA, active but discontinuous mine operations occurred only for an accumulated 5 years.

• Island’s soil is mainly LATERITIC, highly mineralized that agriculture may survive but will never be sustainable nor profitable.

• Barangay surveys of residents in Manicani showed a 85% — 15% approval vs disapproval of mining in the island.

AUSTRALIA MINING MODEL
Australia is a good model for the Philippines and other countries. Mining occupies only 0.02% of total land area but the sector contributes 9% of GDP — compare that with the Philippines’ exports of millions of OFWs who contribute 10% of GDP annually. There are also no “small scale” mining in Australia, only big corporate operations that are easier to monitor for compliance with mining laws by the government.

The sector is heavily mechanized, monster machines, and engines at work at open-pit mines, giving high-paying jobs to tens or hundreds of thousands of people, and can give lots of community projects to cover even nonworkers of the industry.

The Philippine government should learn more from rich and developed Australia. There are more mining entrepreneurs, investors, workers, community beneficiaries and tax revenues there than anti-mining activists.

With this in mind, we should just strictly implement existing laws and not change them arbitrarily depending on the whims of the Environment secretary or the President. We should have a rule of law, not arbitrary rule of men.

Friday, December 08, 2017

This week, the last three days in particular, this blog experienced extra-high views. Top chart here shows hourly views from morning of December 4 to evening of December 7. It started with 200+ views per hour, then 400+/hour, later rising to 600+, peaked at 1,000+ views on some hours. Viewers mostly came from France, Brazil and Belgium.

Bottom chart shows one month views, average of 300+/day, then the "hockey stick" of 9,264 views on December 5, then 14,962 on December 7.

Monday, November 27, 2017

During the ASEAN Summit + Related Summits in Manila,
trade and the further deepening of economic integration was among the major
topics. There were new initiatives as well as updates to existing negotiations
at multilateral and bilateral free trade agreements (FTAs).

Here are some of those old and new FTAs as reported in
BusinessWorld from Nov. 13-16:

4. “US agrees to explore FTA with Philippines” — to be
called the US-Philippines Trade and Investment Framework Agreement (TIFA).

Free trade is good, regardless of what those against it
would say because it always results in “net gains.”

There are always gains/winners and pains/losers the same
way that there are gains and pains under protectionism. When people withdraw
their savings for several months in exchange for a new car or dream vacation,
they derive net gains from trade of savings vs. vacation.

ASEAN is known for its fast pace of tariff liberalization
towards zero compared to many other economic blocs in the world. That’s the
good news.

The bad news is the big increase in non-tariff barriers
(NTBs) or non-tariff measures (NTMs). These are restrictions and barriers other
than tariffs and taxes that make imports or exports of products more difficult,
more complicated and hence, more costly (see table).

The authors also noted that “As the average tariff rates
of ASEAN countries decreased from 8.9% in 2000 to 4.5% in 2015, the number of
NTMs had increased from 1,634 measures to 5,975 measures over the same period.
The increase of NTMs was notable not only in ASEAN but also around the world,
particularly, between 2008 and 2011.”

Among ASEAN member-states, Thailand has the highest
number of NTMs at 1,630, 2nd was the Philippines with 854, 3rd was Malaysia
with 713, 4th was Indonesia with 638, 5th was Singapore with 529, 6th Brunei
with 516, 7th Vietnam with 379, 8th Laos with 301, 9th Cambodia with 243, and
10th was Myanmar with only 172.

The most common NTMs in Thailand and Myanmar was sanitary
and Phytosanitary (SPS) measures while for the other eight ASEAN countries,
technical barriers to trade (TBT) was most common.

The advantage of multilateral liberalization is that all
economies in the world or at least in the region are committed to bring down
their tariffs and NTMs. The disadvantage is that under WTO, real liberalization
remains far off even after 22 years (1995 to present) of numerous negotiations.

The setback of regional FTAs is that while
member-countries can have near-zero tariff and reduced NTMs, other countries
outside the FTA are slapped with high tariffs and/or multiple NTMs.

The advantage of bilateral liberalization is that
differences and disputes can be ironed out easier and faster so that FTA can
materialize soon. The disadvantage is that a country will need to dispatch
plenty of trade negotiation teams to deal with many countries and hence, it can
be costly and messy.

A third way is via unilateral liberalization.

Just bring down the tariffs and NTMs, open up the borders
with little or no conditions. The main advantage of this move is that it can be
done quickly with very little trade negotiation teams and hence, non-costly to
taxpayers. However, the disadvantage is that it is “too scary, too radical” for
many people as it might result in massive labor displacements.

There are a few countries that boldly took unilateral
liberalization and so far, almost all of them have attained economic prosperity
in just a few decades such as Hong Kong, Singapore, Dubai/UAE, Chile.

Unilateral liberalization in goods has been done by the
ASEAN as a bloc. The challenge is unilateral liberalization in services.

With continued modernization in the information and
communications technology worldwide, it is much easier, not harder, to
liberalize trade in services.

Asian economies, the Philippines in particular, should
consider a unilateral liberalization policy. This would involve fewer trade
bureaucracies, taxes and subsidies, and more competition from more suppliers
and manufacturers from countries around the world. Local consumers will benefit
from more choices and more options while shelling out less taxes and fees.

Bienvenido S. Oplas, Jr. is President of Minimal
Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

Sunday, November 26, 2017

Among the global leaders who attended the ASEAN Summit
2017 this week in Manila were the leaders of the US, China, Russia, Australia,
and India. These five countries are also the top five in having the world’s
biggest coal reserves and top five biggest coal producers.

US President Trump in particular emphasized his desire
for “reciprocal trade” with Asian countries. Energy trading is a growing sector
in the US as it is now the world’s biggest oil and natural gas producer
(overtaking Saudi Arabia and Russia in oil and gas output, respectively, since
2014) but not yet the world’s biggest exporter of these two commodities.

The subject of Trump’s energy policies was well-discussed
by many scholars, researchers, and some players during the “America First
Energy Conference” in JW Marriott Houston, Texas last Nov. 9, organized by the
Heartland Institute and co-sponsored by many other US-based independent think
tanks and research institutes.

I attended that meeting and it seems I was the only Asian
in the big conference hall. I went there from a different perspective compared
to American participants — to further understand how the evolving US climate
and energy policies would impact Asia in the short to long-term, the
Philippines in particular.

In his breakfast plenary lecture, Joe Leimkuhler, VP for
drilling of LLOG, a deepwater exploration company, discussed whether the US can
dominate energy as articulated by President Trump.

“Energy dominance” is defined as being able to meet all
US domestic demand and export to markets around the world at a level where they
can “influence the market.”

He showed lots of very interesting tables and charts
including the usual Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis
of current US energy environment. Among his conclusions are the following:

a. Oil, natural gas — The US can have energy dominance in
the short-term but to make it long-term, the shale revolution should be
sustained and supported, and if more gas reserves are discovered.

b. Coal — Supplies can meet domestic demand but may be
unable to provide for short-term exports. There are no coal exporting
facilities on the West Coast to cater to the biggest coal customers in the
world, Asia. The states of Washington, Oregon, and California have passed laws
preventing the construction of such facilities or delaying the permits. US coal
is cheaper to produce and its quality is higher than other suppliers can give.

Many sessions in the conference provided extra
information about the current weaknesses of the US coal industry despite its
huge reserves.

In the session on “Peace Dividend: Benefits of Ending the
War on Fossil Fuels,” Dr. Paul Driessen, Senior Fellow at the Committee For A
Constructive Tomorrow (CFACT), showed these data on electricity prices, 2017,
in US cents/kWh: (a) Germany: residential 35, business and industry 18; (b)
California: residential 19, business/commercial 18, industry 14.5; (c)
Indiana-Kentucky-Virginia average: residential 11.7, commercial 9.5, industry
6.5. Germany, Denmark, South Australia and California have the highest
concentration of wind-solar farms and they have the most expensive electricity
prices in the planet.

The US has the largest coal reserves in the world
estimated at 381-year supply, shown in the Reserves/Production (R/P) ratio.
Russia has the highest R/P ratio because its production and consumption is
smaller compared to the US. China has the second biggest reserves but its R/P
ratio is small because of its huge production and consumption in million tons
oil equivalent (MTOE). In 2016, half of global coal consumption was made in
China alone (see table).

Once the US can build those coal export facilities in the
West Coast and various anti-coal policies in the Clean Power Plan (CPP) and CO2
Endangerment Findings are finally reversed, Asia will have more options of
cheaper and higher-quality coal, aside from what they currently get from
Australia, Russia, Indonesia, South Africa, and others.

The Philippines is a small player in the global coal
market — very small reserves, negligible production (mostly from Semirara), and
meager consumption. Yet many environmentalists seek to further restrict, if not
actually prohibit Philippine coal power plants and force us to depend on
undependable, unstable, unreliable, erratic, intermittent, and expensive
wind-solar energy.

Governments should not pick winners and losers via
legislation and multiple regulations, taxation, and selected subsidies. They
should allow consumers to realize higher consumer surplus via competition and
more choices in energy sources that are cheaper, stable, predictable, and
dispatchable.

Many if not all politicians and "planet
saviours" from developed countries during the UN COP meeting in 2009 or so
were dishonest when they pledged that their countries will give $100B/year to
developing countries starting 2020. Now the latter are asking, "where's
our money? Oodles of money?" And they demand further this week, "More
money on top of $100B/year."

"In 2013, the World Economic Forum estimated US$5.7
trillion will be needed annually by 2020 for green infrastructure. The report
suggests that public funds would need to increase to US$130 billion, an
increase over the Green Climate Fund target of US$100 billion, to leverage
US$570 billion of private capital." https://www.nature.com/articles/nclimate3343

No wonder Al Gore, the UN, WWF, etc. are so passionate to
"save the planet". $100B/year is not enough, $5.7 trillion/year is
the high target.

Saturday, November 25, 2017

Is there a connection between tourism and the travel time
to and from the international airport and the city proper?

I asked myself this question while I was reading Eva
Air’s inflight magazine en route to Houston, Texas.

I spent a total of 17 hours traveling — two hours from
Manila to Taiwan, a layover of one hour, and another 14 hours from Taiwan to
Houston.

The good news is that all three airports mentioned have
free Wi-Fi, especially in Taiwan, which offers fast Internet connections
without requiring registrations. The bad news is that free Wi-Fi does not reach
some gates at the NAIA.

I paid a visit to Houston to attend the “America First
Energy Conference,” set for Nov. 9 at JW Marriott Houston, sponsored by the
Heartland Institute, which also provided me a travel scholarship.

The airline’s En Voyage inflight magazine has one table
that shows the list of the global airports they serve, distance from airport to
downtown, the estimated travel time by train, bus and car/taxi (C), and cost in
local currencies. I reconstructed the table and chose only major cities in East
Asia, computed the average speed by car/taxi travel, then added data on each
country’s international tourist arrivals and tourism receipts in 2016 (see table).

From the above numbers, these preliminary analysis would
show:

1. Economies that have quick and convenient transport
systems between their airports and city centers have higher tourism arrivals,
even if their airports are far away from the cities. These examples include:
China, Hong Kong, Japan, Malaysia, Thailand, South Korea, and Singapore.

2. Airports near their city centers have fewer visitors,
if transport systems between locations are slow. These examples include:
Vietnam (especially Ho Chi Minh airport) and Philippines, both NAIA/Manila and
Mactan-Cebu airports.

There are many factors of course why some countries have
very high tourist arrivals while others have fewer visitors. These factors are
convenience of the airport itself, overall peace and order situation of the
country, dominance of the rule of law, proximity of that city/country to other
important tourism areas in other cities and countries.

If one lands in Bangkok, one can go to Cambodia, Laos,
and Vietnam by land, without the need to take other flights.

Preliminary data show that yes, there seems to have a
positive connection or correlation between fast airport transfer and tourism
arrivals.

The data on Manila airport is a bit outdated because (1) there
are now convenient and fast bus transportaion from NAIA/Manila airport to city
centers of Makati City, Pasay City, and Manila and vice-versa, and (b) newly
opened NAIA Expressway (PPP project by San Miguel) has significantly cut the
travel time by car from the airport’s three terminals to city centers.

Some implications for the Philippines and its
infrastructure and tourism policies.

One, NAIAEx tollway is doing good and should contribute
to attracting more visitors into the country; thus, further extension of this
tollway to BGC and other areas as planned by the project proponents and O&M
operators should be facilitated by the government and not subjected to various
cumbersome and costly regulations and permitting procedures.

Two, moving the Philippine international airport to a
farther but bigger space (Clark in Pampanga, or Sangley Point in Cavite, or
currently rice lands in Bulacan, etc.) complemented by fast train and/or buses
to city centers will be a win-win situation.

Three, allow more integrated PPP (builders and O&M
operation functions are assigned to only one winning bid player or consortium
of players) for big, new airports, not hybrid PPP.